Potential Chinese tariff can be a gut punch to West Central Indiana soybean industry

A large field of soybeans in the late afternoon sunlight Monday, September 23, 2013, off County Road 800 S southwest of Lafayette.(Photo: John Terhune/Journal & Courier, John Terhune/Journal & Courier)Buy Photo

TIPPECANOE COUNTY, Ind. — West Central Indiana's soybean industry has suffered a lot since the 2012 drought.

The industry has lost markets as countries look elsewhere for soybeans. With rebounding supply, the soybean prices have dropped by nearly half since 2012. Rising equipment costs and interest rates are adding to the farmers' debt.

"I know there are some farming operations that are living on a very thin line," said Kevin Underwood, a Tippecanoe County councilman and a long-time soybean farmer.

West Central Indiana, which includes Tippecanoe and nine other counties, produced more than 40 million bushels of soybeans in 2017. The state as a whole produced 320 million bushels, equaling around $4 billion.

But beyond those numbers, soybean plays an important role in Tippecanoe County and West Central Indiana agriculture.

The farmers often cycle between growing corn and soybean. Soybean pulls nitrogen from the air into the soil. Nitrogen in the soil allows corn to grow the following year, Underwood said.

The region's hogs and other livestock also feed on soybeans.

"Two most important crops in Indiana are corn and soybean," said Marshall Martin, an agricultural economics professor and the senior associate director of agricultural research at Purdue University.

More than half of the soybean produced in Indiana is exported. China is so important to the region's soybean industry because the country is one of the main importers of Indiana soybeans, Underwood said.

Underwood expects the tariff, if imposed, would lower the soybean prices by as much as 20 percent.

The potential tariff can force China to look elsewhere for soybeans. Argentina and Brazil are right there, waiting for China, Martin said.